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Litehouse Foods:

Is glass at breaking point?

Samuel Barclay, Alex Davidson


1108598, 1108203
Lincoln University
MKTG 323
Dr. Eldrede Kahiya

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Executive Summary:
This report provides an analysis and evaluation on the decision process undertaken by
Litehouse Foods on whether to continue with glass packaging or switch to a plastic alternative.
Despite the obvious cost savings created by the switch, the decision is not as straightforward
as it may seem. In this report we completed research on the company situation, industry analysis,
market situational analysis and address the issues of supply chain power. A detailed supply chain map
(for both domestic and international markets) is also completed with strategy and value also
discussed.
From the analysis undertaken during the creation of the following report we made five core
recommendations:

Litehouse continues with glass

The jar size is reduced, from 13oz to 12oz.

Product development continues to evolve with market trends

Trucks be contracted to carry goods on return journeys

Glass provider acquires responsibility for full delivery to Litehouse facilities

We believe that these recommendations will allow Litehouse to continue to grow globally,
while still retaining profit and customer value. These recommendations are in line with the businesses
core principles and will give Litehouse increased future flexibility.

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Contents:
Introduction:...............................................................................................................................1
Situational Analysis....................................................................................................................1
Major Markets........................................................................................................................1
Refrigerated Salad Dressing Products....................................................................................2
Refrigerated Salad Dressing Life Cycle.................................................................................2
Implications on Supply Chain Design....................................................................................3
The Refrigerated Salad Dressing Industry.................................................................................4
Bargaining Power of Buyers...................................................................................................5
Bargaining Power of Suppliers...............................................................................................5
New Entrants..........................................................................................................................5
Substitutes...............................................................................................................................5
Rivalry....................................................................................................................................6
How the PLC and Industry Analysis Influence the decision......................................................6
Supply Chain Mapping..............................................................................................................7
General Supply Chain Information:.......................................................................................7
Supply Chain Map..................................................................................................................7
Inbound operations.............................................................................................................8
Outbound operations..........................................................................................................8
Supply Chain Strategy and Value Propositions..........................................................................9
Strategy...................................................................................................................................9
Value.......................................................................................................................................9
Conclusion................................................................................................................................10
Recommendations....................................................................................................................10
References................................................................................................................................12
Appendix 1...............................................................................................................................14
Appendix 2...............................................................................................................................15
Appendix 3...............................................................................................................................16

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Introduction:
Litehouse Foods (Litehouse), the American Company best known for its premium refrigerated
salad dressings, is facing a dilemma, glass or plastic. After its aggressive growth strategy in 2010, the
company has reduced its short-term profitability and is now short on cash. Two competitors recently
switched to plastic jars and, as a result, now have a 15% price advantage over Litehouse. Litehouses
larger value-packs changed to plastic containers only a few years ago. Its smaller, 13oz glass jars,
central to the brands identity, are now being pressured towards the same fate (Lawrence, Mishra &
Pengilly, 2014).
According to Lawrence et al. (2014) and Grant (2004), it all started in 1958 with a single
recipe from Washington chef, Ed Hawkins Sr. His creamy blue cheese dressing became a favourite at
his Hope, Idaho restaurant. It was so popular that he and his sons decided to start their own
refrigerated dressing business in 1963 (Lawrence et al., 2014; Grant, 2004). In 1997, Litehouse
merged with Chadalee Farms, a Michigan-based food service company with a strong foundation in the
Midwest markets of the United States of America (U.S.). Today, Litehouse produce not only a variety
of different dressings, but also dips, sauces, marinades, cheeses, herbs and apple cider (Litehouse,
n.d.c). However, its refrigerated salad dressings are what customers love the most. This is perhaps
unsurprising, given that it won dressing of the year in 2009, 2011 and 2012 (Lawrence et al., 2014).
Litehouse employs over 500 staff across three U.S. production facilities in Sandpoint, Idaho,
Lowell, Michigan, and Hurricane, Utah (Sandpoint Videos, 2011; Lawrence et al., 2014). Company
headquarters are located at the Sandpoint facility. Litehouse is currently 70% owned by the Hawkins
brothers and Wendall Christoff (ex-owner of Chadelee Farms), and employees own the remaining
30%. Current CEO and president, Jim Frank, has consistently led the company through double figure
sales growth since 2010 when he was appointed.
Business development manager Doug Hawkins Jr. (Grandson of Ed Hawkins Sr.) needs to
provide the executive team with an analysis and recommendation as to the appropriate decision
between glass and plastic. The following report discusses the companys situation, industry and
supply chain. Through this information Kinetrix will be able to provide comprehensive
recommendations to Litehouse that will enable them to make the appropriate decision between glass
and plastic.

Situational Analysis
Major Markets
Litehouses refrigerated salad dressings target the well-educated, middle-upper class
consumer looking for healthy, quality products that are good for the environment. The dressings are
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sold to warehouse clubs, grocery chains and food-service businesses throughout the U.S., Canada and
Mexico (Guilfoil, 2012; Canadean, 2014). Consumers can find Litehouse dressings in over 126 stores
across the world, with notable shelf presence at big retailers like Wal-Mart, Costco and Albertsons
(Litehouse, n.d.a). In the U.S., Litehouse is in every state, but its most successful market is in the
Northwest region of the country where it is the market leader. In Canada, Litehouse has a presence in
every province and has the second highest market share in refrigerated dressings (Lawrence et al.,
2014; Sandpoint Videos, 2011). Its dressings have recently entered Mexico and Litehouse is looking
to expand into new areas, such as Asia, Latin America, and Europe (Lawrence et al., 2014).

Refrigerated Salad Dressing Products


Litehouses refrigerated salad dressings make up 60% of its revenue. (Lawrence et al., 2014).
Therefore, the decisions made in this product category have wide ranging implications for the
companys overall success. Litehouse (n.d.c) illustrate that its salad dressings can be split up into three
types based on size: value-size, single-serving size and standard size. Value-sized dressings are sold in
gallon-sized, 32oz, 25oz and 20oz plastic containers (Litehouse, n.d.c). The three larger sizes are sold
to food service businesses and warehouse clubs like Costco. The 20oz-sized bottles are sold to
grocery stores, such as Albertsons (Lawrence et al., 2014). Single-sized servings come in 1oz, 1.5oz
and 2oz sizes. These are made exclusively for food service businesses. The standard sized bottles
include 12oz pourable dressings and 13oz creamy spoonable dressings all sold in glass jars through
warehouse and grocery retailers (Litehouse, n.d.c). The 13oz-sized creamy spoonable dressings are
what customers associate the Litehouse brand with due to the products longevity and signature taste.
There are 32 different flavours ranging from new gourmet, such as the feta dill Greek yoghurt
dressing, to more standard favourites, like Chunky Bleu Cheese (Litehouse, n.d.b). It is a premium
product made fresh with 100% canola oil, low carbohydrates, and no MSG, preservatives, or
additives, thus catering for the educated, upper-middle class, health-conscious consumer Litehouses
target market (Lawrence et al., 2014). This 13oz dressing was the one in question. Should it remain as
a 13oz jar bottle or should it change to a 12oz plastic bottle the industry standard that could narrow
the price advantages between it and its competitors.

Refrigerated Salad Dressing Life Cycle


Refrigerated salad dressings, as a product category, have come a long way for Litehouse. In
considering the categorys overall product life cycle (PLC), the product development stage
commenced when Ed Hawkins created the famous bleu cheese dressing at the restaurant he and his
wife bought in 1958; it was the first product under the Litehouse brand (Adams & Armstrong, 2009;
Grant, 2004). By 1963, Ed and his son finally decided to sell the bleu cheese and newly created
thousand island dressings to its first store in Sandpoint, Idaho (Lawrence et al., 2014). This was when
the category entered the introduction stage of its life cycle (Adams & Armstrong, 2009). In 1975, the

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category entered the growth stage of its life cycle after Litehouse secured accounts in Albertsons
grocery chain (Adams & Armstrong, 2009; Guilfoil, 2012). Several other accounts were secured over
the following years, including Safeways grocery chain in 1977. Salad dressing sales reached
$100,000 in 1974 and grew to $6 million by 1984 (Guilfoil, 2012). Growth then remained relatively
stagnant from 1984 to 1989. This was due to the companys heavy focus on retail dressings within the
produce sections of grocery stores (Guilfoil, 2012). As sales growth steadied, the category entered its
maturity stage (Adams & Armstrong, 2009). However, through strategic market and product
modifications, Litehouses refrigerated salad dressing category has continued with positive growth
that has enabled it to compete strongly in the industry. This cycle is shown in appendix one. Note that
this diagram is not to scale.
Since 1984, Litehouse has demonstrated these modifications by introducing a robust range of
dressing flavours and targeting new markets. For example, in 1989, the company recognised a
growing market in member-store and food service businesses, and thus began selling its value and
single serve sized dressings to these new customers. Five years later the companys sales hit
$20million (Guilfoil, 2012). Another example was in 2004, when Litehouse offered one carb plus, a
dressing low in carbohydrates that targeted a growing market of health conscious consumers (Keller,
n.d.). Modifications like these spur, what Vendetti (2012) refers to as revival stages, which creates
growth in an entire mature category. This is illustrated in appendix one where the maturity stage of the
graph shows small revival stages that increase overall growth for Litehouses refrigerated salad
dressing category. The effects of the 1989 market modification are shown by the revival stage from
1989 to 1994 (Revival Stage 1). In addition to modifications, salad dressings are considered a normal
good in many households, so the chance of any significant sales decline in the future is somewhat
unlikely. This makes the life cycle of salad dressings relatively long.

Implications on Supply Chain Design


New products will bring different ingredients or materials through the supply chain. The key
to this change, especially given the perishable nature of refrigerated salad dressings, is time to market.
If Litehouse can enter the market early, it can set its own prices and start building customer relations
before its competitors. This speed is linked to a supply chain designed to reduce complexity. For
example, sourcing from current suppliers wherever possible and standardising materials will speed up
the process. Many other changes, from factory machinery to new distribution channels, may also be
needed. Integrated supplier and customer relationships aid this process. According to CDC Software
(2006), Litehouse use its Ross ERP system, Ross SCM system, and Ross EPM Sales to achieve
internal and external integration, and systems thinking. This software provides all decision makers
with timely and actionable information related to product profitability, inventory reductions, on-time
delivery, production streamlining, stock-outs and sales performance. The exchange of this information
links all players in the supply chain, enhances visibility, and ultimately allows Litehouse to
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understand, attract and keep valuable customers (CDC Software, 2006). Due to this product
categorys long life cycle, Litehouse will also be looking for long-term relationships, particularly with
suppliers of its core product ingredients (e.g. glass and buttermilk) and its big distributors (e.g.
Walmart). These relationships also drive collaborative thinking making it easier to discover market
niches and develop new innovative products.

The Refrigerated Salad Dressing Industry


In 2011, the retail salad dressing industry was worth $3 billion and had a 95% household
penetration rate. Litehouse is a player in the refrigerated salad dressing segment, which made up 15%
of this industry in 2011 (Lawrence et al., 2014). Refrigerated salad dressings need to be kept fresh and
reach the customer quickly to avoid expiring. This means products are transported in refrigerated
trucks with relatively short lead times. Through its integrated software systems Litehouse has
achieved this by having a 97% on-time delivery rate and 95% order fill rate (Consumer Goods
Technology, 2006). Dressings are packaged in not only plastic, but also glass. This means that glass
packaged dressings need to be handled carefully, both in production and transit.
Over the last few years the surge in healthy, quality food has created new niche markets that
well-known salad dressing brands, like Litehouse, have capitalised on. According to Early, Holcomb,
Willoughby and Brooks (n.d.), the health trend has increased the growth of salads, which has thus
increased the growth of salad dressings. Mandatory nutrition labelling and better-educated consumers
have seen sales for high-fat dressings fall, whilst low-carb, lite options have grown. This is a trend
that is expected to continue. Diets like Atkins and South Beach have brought significant growth in
pre-packaged salad mixes, and thus low-carb salad dressings in smaller serving sizes. There has also
been a growing market for all-natural, organic and gluten-free dressings, and research has shown that
consumers are willing to pay a premium for this added quality. The freshness and taste of refrigerated
salad dressings have become more popular in restaurants and fast food outlets, which have grown
significantly due to consumers searching for greater convenience. In recent years, consumers have
demanded robust flavours that incorporate gourmet ingredients, such as bacon and dill. Traditional
flavours, such as ranch, have also been strengthened with garlic or sweet onion (Early et al., n.d.).
There is also a large trend towards culturally inspired tastes (e.g. Litehouses OPA Greek yoghurt
dressings), with particular growth expected in Latin American and Mexican fast food stores that
require these robust flavoured dressings (Transparency Market Research, 2013). Despite all these
trends, businesses will need to make sure quality taste and texture (that matches customer demand)
stays at the heart of what they do. After all, dressings are merely used as flavour enhancers for other
foods.

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Bargaining Power of Buyers
Buyer power is determined by the concentration of buyers, the ease at which buyers can
switch between different suppliers, and the importance of the good to the buyers output or customers
lifestyle (Ahlstrom & Bruton, 2010). Litehouses buyers its end customers and retailers (grocery
chains, warehouse clubs and food-service businesses) have high market power. In 2013, 91% of
U.S. food sales came from grocery stores and nearly 40% of these sales came from its four leading
grocery retailers, Wal-Mart, Kroger, Safeway and Publix (USDA, 2013). Litehouse have secured shelf
space with Wal-Mart, Safeway and Albertsons, and Wal-Mart provides the distribution networks into
new countries like Mexico (Lawrence et al., 2014). Buyers have insignificant switching costs because
refrigerated dressings are not high expense items relative to income. Industry retailers typically sell
hundreds of other products, so dressings have little impact on sales. Although this is a standard
household item, it is not a critical one, thus the need to purchase it is not significant either.

Bargaining Power of Suppliers


Supplier power is based on the demand for supplier products and how differentiated the
inputs are (Ahlstrom & Bruton, 2010). Ingredients like oils, eggs and dairy products, and packaging
materials like glass and plastic, are common across many different industries, which means suppliers
are not usually difficult to find. Most of the inputs received are relatively standard; it is the way
companies put them together that creates the differentiated product. However, the emergence of
organic dressings will make sourcing organic ingredients more difficult. This overall lack of supplier
power makes it relatively easy to secure supply channels. However, suppliers will still need to meet
Litehouses requirements in terms of delivery and quality, and, if what they supply is significant to its
quality and output (e.g. glass or buttermilk), these relationships can be built and sustained for the long
run.

New Entrants
The threat of new entrants is small. The automated machinery, numerous flavours and
ingredients, quick delivery time and need to produce in large volumes to attain economies of scale
makes the whole process very costly and complicated for a new entrant. In addition, securing
distribution channels will be difficult due to limited shelf-space. Developing unique product flavours
that capture the attention of customers loyal to competitor brands that have been around for decades
also presents a problem. All these challenges make it very difficult to enter the market. Only entrants
with highly differentiated dressings and access to capital and distribution channels will succeed,
assuming they attain sufficient customer demand.

Substitutes
Substitute products are products that perform a similar function, but are not considered to be
in the same product category (Ahlstrom & Bruton, 2010). Substitutes for this category include shelf
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stable salad dressings, sauces, and dips. However, these substitutes often dont compare to the
freshness and quality of relatively healthier refrigerated salad dressings. They are also more likely to
be in plastic packaging, which is typically perceived as poorer quality. Overall, the strength of
substitutes in this market is low, which means supply chains are more likely to serve loyal consumers
for longer periods.

Rivalry
According to Ahlstrom and Bruton (2010), the key factor that reduces rivalry among
competing firms is differentiation. Litehouse only has three significant competitors in this market, in
the U.S., Maries and Marzetti, and in Canada, Renes (Lawrence et al., 2014). All three differentiate
their dressings as premium, healthier products similarly to Litehouse. However, they do have small
differences. Maries claim to capture a unique homemade flavour, Marzetti emphasizes that it is
gluten-free, and Renes focuses on social and environmental responsibility (Maries, 2015; Marzetti,
2015). Although there is some differentiation, the lack of competing firms makes rivalry a moderately
strong force.

How the PLC and Industry Analysis Influence the decision


The PLC and industry analysis highlight the importance of the end customer and that
integration and differentiation are key. The strength of buyers in the industry drives this need for
differentiation. Fawcett, Ellram & Ogden (2007) explain that companies differentiate themselves in
the minds of consumers by looking at the five areas of customer value: quality, cost, flexibility,
delivery and innovation. Quality and cost are key in this decision.
Selecting plastic could harm four of the eight factors that comprise quality: aesthetics,
perceived quality, reliability and performance. Aesthetics refer to perceptions of fit or finish
(Fawcett et al. 2007). Plastic packaging may make a product look and feel cheaper than glass.
Similarly it will affect perceived quality overall product or brand perception when consumers
relate plastic to thoughts of chemicals leaching into food, polluted waterways, and burning fossil
fuels. Reliability and performance could fall if consumers discover that chemicals had leached into the
dressings. Also, the taste of the product, critical to its success, may change due to the permeability of
plastic.
Staying with glass harms the area of cost the most. According to Lawrence et al. (2014), the
company could save $1.5million per year by switching to a 12oz plastic jar. Only a third of these
savings come from the plastic packaging, the rest comes from the fewer ingredients in the smaller jar.
The specific savings from plastic packaging come from less breakage, lower fuel consumption (due to
lighter packaging), and less stoppage time associated with the lid seals. However, it would initially
cost Litehouse close to $1.5million to implement all the necessary changes (Lawrence et al., 2014).

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Litehouses target market is prepared to pay a premium for better quality. Glass is the gold
standard in packaging and market research shows that customers tend to agree (Lawrence et al.,
2014). Plastic packaging creates cost savings, but Litehouses target market value quality over costs.
In this case, something that eliminates cost may eliminate overall value, and, for todays supply
chains, value orientation is more competitive that cost orientation (Novicevic, Buckley & Harvey,
2000). If Litehouse changed its core product to plastic we may see fewer revival stages and a steadier
maturity curve that could plateau and perhaps decline altogether. However, by not changing, the
competitors still have a 15% price advantage (the highest it has ever been), and the challenge to
improve short-term funds and profitability still remains. Therefore, Litehouse will need to look for
other ways to add value to the end customer without harming the value it already adds.

Supply Chain Mapping


General Supply Chain Information:
Litehouse operates a push based supply chain model (Lawrence et al., 2014). This requires
Litehouse to predict the end consumer behaviour and couple it with the behaviour of the retailers.
Fortunately, due to the products perishable nature, the supply chain cannot stockpile. This also
reduces the bullwhip effect.
Litehouse operates a partial vertically integrated supply chain. It operates a fleet of fifty
refrigerated trucks, which haul half its product. The remaining half is hauled by a common carrier.
Litehouse also uses its fleet to haul other company loads back to areas near its facility (Lawrence et
al., 2014). By operating with this never an empty truck style philosophy, Litehouse ensure they are
saving costs and reducing waste.
Another key aspect of the Litehouse supply chain is its producer visibility. Litehouses use of
its Ross ERP system (implemented in 2002) allows it to better track its manufacturing process (CDC
Software, 2006). As a result, Litehouse can manage and record exactly which ingredients entered
which products, making the perishable final product safer from contamination.

Supply Chain Map


Most products in the supply chain remain unmodified until they reach Litehouses
factories where the dressings are made. Major product transformation occurs here (U.S.) because
these locations are closest to its largest customer base. This means product can be delivered to
customers faster, thus maximising shelf life.
As with any supply chain there are some crucial relationships that exist. The core suppliers
(e.g. of glass, buttermilk and labels) are critical to the Litehouse set up. By maintaining a strong
relationship with these suppliers, Litehouse is able to ensure that it is getting the best quality at the
right time. Another group of key relationships exists between Litehouse and the large-scale retailers.
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Wal-Mart, Sams Club and other national retailers play a critical role for the Litehouse supply chain.
By maintaining strong relationships with these brands, Litehouse is able to gain international brand
exposure and gain access to a greater customer base. Large retailers also have the power (through
economies of scale) to force suppliers into unbeneficial situations. By maintaining a strong
relationship with these brands, Litehouse is able to ensure its future in the industry.

Inbound operations
Of the inbound materials, the glass jars are the only products Litehouse accept ownership of
prior to its arrival at the factory door (Lawrence, 2014). Although this is only a minor detail, it has a
significant impact on the supply chain and inventory levels. The jars are purchased from a supplier in
Taiwan then shipped to the American port of Seattle, where Litehouse or third party haulers pick them
up. The acceptance of ownership means that Litehouse is liable for damage during the five and a half
hour trip to Sandpoint. While this may seem insignificant it is actually very important and potentially
costly. Glass is brittle and fragile (compared to plastic) and more prone to breakage (0.25% of jars
break on average for Litehouse), which creates unnecessary waste. Another downside of receiving the
jars at the port was that Litehouses refrigerated trucks might need to carry them. Litehouse use a
mixture of self-hauling and contractors (they also contract their fleet out), but the use of refrigerated
trucks to carry glass may save costs but also reduce profits.
Plastic containers would have a huge impact on the inbound logistics. The first key impact is
that Litehouse could receive the product at the factory, limiting liability and reducing transport costs,
as returning trucks can be used to carry other goods. If plastic is sourced within the U.S., the distance
travelled would be significantly less than the glass from Taiwan.
Inbound produce and ingredients are signed in and allocated codes upon arrival, using the
ROSS system. This allows Litehouse to fully track and monitor ingredients movements through the
system (CDC Software, 2006). The ingredients become property of Litehouse once it is signed in.
Therefore, all transport and security is the responsibility of the provider, limiting the risk to Litehouse.

Outbound operations
Once the finished product is ready for transport it is loaded into a refrigerated truck, owned
either by Litehouse or a contractor. Litehouse operates three main facilities all with varying levels of
distribution to the areas of North America. This is visible on Appendix 2 & 3.
In this process glass has a noticeable impact. Glass jars are heavier and require more space
(mostly because of the increased weight pushing haulers to regulation weight limits sooner), this
limiting the amount of product per truck. In contrast, plastic containers would allow for increased
truckloads as well as lower associated costs (fuel and tyre wear). Glass also continues to carry the
higher breakage costs over plastic.

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Supply Chain Strategy and Value Propositions


Strategy
Because Litehouse produces a perishable product, it most likely uses a logistics postponement
strategy. Pagh & Cooper (1998) explain that this involves speculative manufacturing, which is
inventory initiated, postponed logistics, which is customer initiated, and a customer order point,
which would be made at a Litehouse facility. Litehouse has been producing and selling for over 50
years and subsequently will have an abundance of historical order data to formulate predictions for
speculative manufacturing. By offering multiple products with similar ingredients, Litehouse is able
to reallocate resources immediately if they under speculate while still maintaining enough until an
increased stock order is made, allowing flexibility through the supply chain. The product range
Litehouse has developed is crucial to allowing such a beneficial supply chain strategy. The flexible
lean design achieved through postponing logistics helps to reduce the waste caused by operating a full
speculative strategy. This is because the logistics postponement is in line with customer demand.
Overall, this strategy increases on-time deliveries, reduces lead times and enables a faster introduction
of new products (Pagh & Cooper, 1998). Together, these characteristics are critical for Litehouse,
given the need for freshness and continual modifications that match customer value.

Value
In addition to the earlier discussion on what customers value, another value added dimension
of the Litehouse supply chain is its technology management. Litehouse was an early adaptor to ROSS
and other integrated operations software developments. This allows Litehouse to track every item in
the system all the way through to the end consumer. When a product enters the system all its
information is entered and that information follows the item all the way to the store shelf. This adds
value to consumers because it allows them to feel safe when consuming the product. In the past, food
supply chains have been heavily impacted by contamination at the early stages of production.
However, with this system Litehouse can recall only the products affected with minimal disruption.
The supply chains micro-agility is also a key value adding competitive dimension. The
diversity of the Litehouse product range gives the supply chain the ability to react to internal issues
with speed. Another factor that helps this is that the company is employee owned. This means that the
organisation has the ability to meet staff and shareholder needs at the same time. This ownership also
gives managers a better overall perspective when reacting to near term changes. This adds value
because it speeds the decision making process affecting both costs and revenue.

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Conclusion
Since its humble beginnings, Litehouse Foods has consistently produced dressings that
consumers love. Through its dedication to quality and taste, Litehouse has become a leader in the
industry. However, Litehouse are now faced with a decision that will impact this position, for better or
worse. For this reason, it needs to be carefully considered with respect to the product life cycle, the
industrys forces, and the supply chain and its strategy.
In the past, Litehouse has used carefully selected product and market modifications in line
with growing market trends and demands to increase the revival stages that sustain its growth.
Integrated relationships with key suppliers and retailers (through Litehouses Ross systems) enhance
the effectiveness and responsiveness of such changes. Any modifications must always link to the
customer, given their strength in the industry. Buyers want products that meet or exceed their
understanding of value. We have also discussed the importance of risks, relationships, technology, and
the logistic postponement strategy to Litehouses supply chain.
Together, this analysis has provided Kinetrix with comprehensive recommendations that will
allow Litehouse to make effective decisions that improve short-term profitability and the supply
chains overall competitiveness.

Recommendations
Kinetrix believe that Litehouse should continue to produce these particular dressings in glass
jars that are one ounce smaller. The decision to stick with glass is based on the fact that a greater
degree of customer value resides with product quality over product costs. Two-thirds of the cost
savings associated with this decision are from the smaller 12oz size. These cost savings come from
fewer ingredients and better capacity utilisation on trucks and shelves. The trend towards diets and
smaller serving sizes also make this smaller jar a positive change that matches demand. Overall, this
will allow Litehouse to increase its short-term profitability and funds, and narrow the price advantage
between it and its competitors without destroying significant customer value.
However, the decision between glass and plastic arose because of short-term profitability and
cash concerns. Therefore, Kinetrix has also looked at other areas of the supply chain to improve this.
Looking at the market trends, Litehouse should continue with culturally inspired dressings, like its
OPA Greek Yoghurt Dressings. The expected surge in Latin American and Mexican flavours should
spur new product innovation in this direction. Also, as consumers look for greater convenience foods,
Litehouse should continue to establish relationships with healthy fast food chains, as these are
expected to grow. Organic and gluten-free dressings are also another growing trend that should be
considered more seriously if Litehouse wants to continue to meet the demands of its target market.

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Lastly, the glass jars are shipped into Seattle where Litehouse trucks or contractors collect
them on the return route; this is a wasteful process. Because Litehouse operates refrigerated trucks,
there is more benefit from contracting them to haul other perishables on the return journey. By doing
this, Litehouse has the ability to profit from the return route. To supplement this, we recommend that
Litehouse looks for a supplier closer to its facilities. If Litehouse were to get a South American
supplier at approximately the same price the logistics of glass jar delivery would be simplified.

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References
CDC Software. (2006). Litehouse Foods Tunes Operations for Optimal Customer Service with CDC
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Appendix 1

Revival Stage 1

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1994

Years

Figure 1 - life cycle of litehouse f

Litehouse Foods: Is glass at breaking point?

Appendix 2
Litehouse Domestic Supply Chain Map

Appendix 3
Litehouse International Supply Chain Map

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